Postpaid-prepaid ARPU gap narrows, but pricing divide runs deep

India’s telecom operators may be watching prepaid and postpaid average revenue per user converge, but the pricing gulf between the two customer bases shows no sign of closing, according to analysts and industry executives.

Prepaid users paid less than their postpaid counterparts for years, but that pattern flipped in June 2025 and returned again in March 2026. This shift is anticipated to harden into a lasting trend, largely due to the growing footprint of machine-to-machine (M2M) connections, which crossed 131 million by May. Data from the Telecom Regulatory Authority of India shows postpaid users now account for roughly 10 percent of the country’s 1.3 billion mobile subscribers, up from an 8-9 percent share in earlier years.

Prashant Singhal, markets leader and telecommunications leader at EY India, explained that Indian telecom Arpu has shifted considerably over the past five years. The postpaid-prepaid differential stood at ₹129 in the quarter ended March 2021, but by March 2026 it had flipped, with prepaid running ₹1.9 higher than postpaid. He linked this reversal chiefly to prepaid Arpu surging 102 per cent over that period while postpaid Arpu slipped 14 per cent, noting that because most M2M SIMs sit in the postpaid category, they have dragged down the segment’s overall average.

By March, prepaid Arpu had edged past postpaid, ₹196.22 versus ₹194.31. The quarterly metric captures how much revenue a carrier extracts from each subscriber every month, and according to Crisil Ratings, every rupee gained in Arpu translates into an additional ₹850-950 crore in industry-wide operating profit, underscoring why the figure is watched so closely as a profitability signal.

Singhal attributed part of the rise to steadily costlier entry-level prepaid recharges, noting that carriers have pushed through three rounds of tariff increases since 2019, each in the 10-21 per cent range.

Brokerages such as JM Financial and Axis Capital anticipate a fresh round of hikes, in the range of 10-15 per cent, within the next three to six months, which would push Arpu higher still. In a note dated July 1, JM Financial analysts pointed to improving visibility on a 12-15 per cent tariff increase over that window, citing easing inflationary pressures following the opening of the statement of hearing given the last hike came in July 2024, alongside the government’s push for a 3+1 player market structure and the industry’s need to lift returns on capital as it struggles to monetise its substantial 5G spending.

Even so, postpaid subscribers continue to shell out considerably more each month, a cohort typically less sensitive to price and more focused on network reliability, brand reputation and service quality. Analysts note that entry-level prepaid and postpaid plans remain meaningfully apart on price, with postpaid continuing to set itself apart through bundled perks such as family plans, international roaming and OTT subscriptions, extras that not every subscriber ends up using or valuing fully.

Prepaid, meanwhile, remains the default choice for many Indians, prized for its flexibility, tighter spending control and overall convenience. Some migration from prepaid to postpaid will always occur, especially among higher-value users, but analysts caution against reading the narrowing Arpu gap as evidence of a broader shift toward postpaid.

Analysts also note that postpaid plans in India offer comparatively few added perks, especially as prepaid packages increasingly bundle in OTT content and other value-added extras, a premiumisation push that has blurred some of the old distinctions. India’s mobile-first digital ecosystem has only reinforced this, making recharges and payments faster and more seamless than ever. Singhal added that prepaid’s appeal lies in the greater control and visibility it gives users over their usage, along with easy service add-ons, especially since bill values involved are not particularly large.

The uptick in prepaid Arpu, analysts add, stems from a mix of tariff hikes, rising data usage and premiumisation, not from a wholesale migration of users toward postpaid plans.

CT Bureau